Ren Zhengfei Leads Huawei's Ascent Into the Public Cloud Market
Li Na
/SOURCE : Yicai
Ren Zhengfei Leads Huawei's Ascent Into the Public Cloud Market

(Yicai Global) April 13 -- Huawei Technologies Co. has unleashed an attack on the cloud market, though strong competitors already throng it, despite each of its main businesses facing strong rivals. Major market players in the market such as Amazon Web Services, Microsoft Corp. [NASDAQ:MSFT] and China's giant Alibaba Group Holding [NASDAQ:BABA] are all marching toward the global market.

"Which of the industries that Huawei has set foot in doesn't have keen competition?" asked Zheng Yelai, president of Huawei Cloud Bu Yicai Global and other media at Huawei Global Analyst Summit on April 11 rhetorically. "Smartphones, servers, or chips, all these are fully competitive areas. Huawei has been facing fierce competition."

In fact, with the advent of the era of information and communications technology (ITC) integration, the field of cloud computing has long been a strategic point for technology giants to compete over for future opportunities, with clouds of smoke already floating over some areas.

Over the past three months, Ren Zhengfei, Huawei's low-key founder, has become a VIP guest in many provinces. The agreements Huawei inked with these provinces' government show cloud computing, Big Data and smart city construction as the focus of these deals.

Huawei used to be and is one of the biggest beneficiaries of cloud computing, Big Data, and mobile Internet. Whether it can hold onto this position in the future depends on whether Ren can make Huawei dominant in the cloud market, which is a huge challenge.

Pushing Into the Public Cloud Market

Huawei has shown an unprecedentedly earnest attitude towards the public cloud market in recent years, but how will this laggard compete with AWS, Microsoft and Alibaba?

"Huawei's public cloud strategy is, first, to set up its own public cloud business, and to develop its public cloud by partnering with global operators to jointly build an ecology with operators and business partners to achieve industry cloudization," said Xu Zhijun, Huawei's current rotating CEO. "Huawei hopes external competition will be more intense to spur operators to accelerate the transformation of their cloud businesses," he added.

Compared to Alibaba and other rivals, Xu believes that Huawei's biggest superiority lies in its partnership with operators and its ability to serve industrial enterprises offline.

For example, Deutsche Telekom AG [WKN:555750] and China Telecom Corp. [HK:0728] have built cloud platforms based on Huawei's cloud technology. By sharing unified technology and ecology, they are also part of Huawei's global public cloud capabilities. Huawei will also provide cloud migration advice and service support for its offline services.

Zheng Yelai stressed that Huawei has more than 12,000 partners in the world, and will also use its ecological advantages to play its value in the cloud ecosystem.

Currently, cloud-market opportunities mainly cluster in four types of enterprises. The first is small, medium and innovative enterprises, which are labeled price-sensitive, low loyalty, simple business, and ready-to-use. The second type is governments, which are characterized by long-term investment, big returns, complex relationships, a high technical threshold, and emphasis on operations and services. And the PPP (Public-Private Partnership) model has also recently been introduced. The third kind is large companies, to whom a hybrid cloud is normal and technical priority and safety first are the focus. The fourth sort is the general business user who has demands for scenario and industry background and depends on technologies.

"Although there are different players entering the market for each type of customer, there is no one cloud computing vendor yet that can cover it all," said Wu Yuzheng, editor-in-chief of hindata.com.

In his view, Huawei can provide infrastructure, equipment, operations and maintenance services. "In other words, Huawei has everything that you want."

Price War

All major vendors spare no efforts in employing differing approaches for their investment in the cloud business.

Alibaba's cloud computing is more applicable, and the company is also a leader in popular technology. In contrast, with a clearer margin, Huawei focuses on infrastructure. For example, Huawei is not positioning artificial intelligence as a new business, but sees it as an 'enabling' technology.

Technically, Huawei's public cloud developed based on OpenStack. It is advantageous in that it rests on an open platform architecture that enables smooth migration and sharing of enterprise services. At the same time, it focuses more on reliability and security.

Huawei can even provide different hardware configuration settings according to the varying safety requirements of customers, Zheng said earlier. And to ensure service compliance, Huawei has also set up strict security management standards to serve global operators, ensuring that customer data are under the control of customers themselves. "Huawei always pursues provision of safe and reliable services for its customers."

Huawei seems to be facing a price war without gore now, but market competition may be more brutal than imagined. In addition to a recent cloud contract Tencent Holdings Ltd. [HK:0070] won from the Xiamen, Fujian provincial government by bidding one penny (i.e. gratis), Alibaba's cloud service Aliyun has engaged in many profit-sharing promotions. Aliyun instituted a total of 17 price reductions in 2015, and this trend continued last year.

"Huawei adopts two simple models in its cooperation with governments. One is providing products and partners to meet their IT requirements; the other is providing computing storage resources directly to them via their cloud service. Huawei will not mimic the means other vendors employ," said Xu Zhijun, referring to the price war over government cloud contracts.

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Keywords: HUAWEI , Cloud , TECHNOLOGY